 |
|
|
Download Article
 |
 |
 |
|
          |
|
Collections and Judgments
Having a collection(s) or Judgment(s) doesn’t make you ineligible for mortgage financing. However, certain collections and judgments will have to be paid prior to closing. That’s where we can help. There are ways to deal with collection agencies and creditors, to better protect your credit in the future. You are protected under consumer credit laws. We will deal with each issue separately. These are issues that are often not pleasant to deal with, but with some time and diligence can be finally taken care of and be off your credit. Make yourself a folder in your files for these documents. Label it “My Credit Information” this is where you will put copies of your credit reports, any documents that show paid collections or judgments or even loans paid in full. You want to keep all these documents because whenever you need to verify something on your credit report you will have it handy and many times it is near impossible to get copies once you have lost the original. Collections: Most large collections, other than medical will have to be paid prior to closing on a home loan. However, here are a few tips for dealing with a collection. You can start doing this on your own and once you get into our program we will help you as well. 1. ALWAYS consult your mortgage representative before paying off any collections. Some collections may be old enough and no activity has been noted on your credit report that leaving it alone may be in your best interest. This is on a case by case and there is no hard and fast rule. As long as a collection is continually being reported on your credit report you really need it taken care of before you will get a home mortgage. 2. Do not pay the current Collection Agency- find the original creditor and contact them for a final payment amount. If you are not sure who the original debt was with you can go to the back pages of your credit report for the creditors name and contact information. The only type of creditor that will not be clear is for medical collections, they are often just reported as medical nonpayment, but hopefully you would recall who that was with for making payment arrangements. 3. Before you pay a collection ALWAYS ask if they will settle with you- as long as you pay in full today. You always want to bargain prior to paying, that is all you have to work with, once you have paid they have no incentive. You also need to ask them if you pay in full today will they remove the debt from your credit completely. Again, this is if you pay today will they setting for a smaller amount and remove it from your credit. 4. Before making a final payment- ask for a letter documenting your conversation, and the amount that they have agreed to settle for. You need to make sure the letter has their letter head, date, amount settled for and if they will remove it from your credit entirely. It must say ”this debt was erroneous and will be removed from this person’s credit” . 5. Do Not Pay In Cash: Make a copy of the check or money order you pay with, and get a receipt from the creditor once you have paid. Make sure that the receipt clearly states the account number, the account balance and that the debt will be removed from your credit. An example of this would be if you had a bill from your cell phone service called Fast Phone and say the bill was for $150. Then over a period of time they sold it to a collection company and now you have a collection from ABD collections for $250 with all the fees. You need to call the original creditor which would be Fast Phone and do #2-4 . You do NOT pay in cash, always a traceable method like check, certified check or money order (be sure you make a copy of it before you give it to them). And then have them hand you a letter that the account is closed and paid in full and will be removed from your credit. 6. Do Not Lose These Documents. Collection agencies are notorious for taking payment from you, then putting the debt back on your credit 60 days later. You always want to have documents to prove that you paid it and it was to be removed, then you can go directly to the credit bureaus yourself if needed. 7. Send a copy of the letters, copy of the check and a letter- to all 3 credit bureaus with an explanation that this collection has been satisfied and here is the proof. You need to include proof of your identity as well so it is taken off the correct person’s credit report. Allow 30-60 days for the credit bureaus to get back with you- typically by letter. Do not try to rush them, this is the time frame they have to work with. 8. In the future, if you are falling behind on a payment- Call the creditor before it goes to collection. A lot of times they will work with you and make payment arrangements. It certainly can’t hurt. Credit Bureau Information: Judgments When qualifying for a home loan some collections are ok but judgments are a legal reported document against you personally. It goes in 1st position before a mortgage and needs to be satisfied before you will be approved for a home mortgage. Judgments affect a title commitment for real estates, so they have to be paid and or removed prior to closing on a home. In certain cases, you can fight these, and take the creditor back to court. If they didn’t actually serve you- or if the debt is not yours and they can’t prove it was yours- you may be able to get the judgment cleared. Unlike collections, you have to settle a judgment with whoever placed the judgment. This may be a bill that started again with a phone service but then was sold to collection companies and then a lawyer bought it and filed the judgment. In this case it needs to be settled with the lawyer. 1. If you have already paid this debt before it became a judgment, you need to contact the creditor to get proof. 2. If you have not paid the debt yet, and you don’t know who the creditor listed is- then there are 4 steps you need to follow: a. Go to the El Paso County Clerk & Recorder Office and get all the account information on the judgment that has been filed (this is a legal document and the county clerk will have the records). They will have the contact information of the creditor. For El Paso County here in Colorado: El Paso County Clerk and Recorder: Centennial Hall 200 S. Cascade Ave Colorado Springs, CO 80903 8am-5pm (M-F) except holiday Phone: 719-520-7074 Fax 719-520-6230
b. Contact the creditor and see if they will accept a settlement for the balance owed. Also- ask to see the original debt owed against you. You may not be liable for all the charges and fees added to the debt. c. If the debt is in fact yours- then follow the same rules for collections when paying a creditor (steps 2-7 under collections above). d. Take a copy of your receipt and a copy of your check back to the County Clerk& Recorder and get a “Satisfaction & Release of Judgment” letter. This document will be notarized. As soon as you get it- make 3 or 4 copies. Never lose this document! 3. You will need to provide your lender with a copy of the judgment satisfaction. You will also likely have to bring the original to closing with you. Remember keep copies of this in your folder! 4. If you have judgments from other states you will need to look up their clerk and recorder offices according to the county. They should be able to help you over the phone.
If you have any problems or questions- contact your mortgage representative along the way. They are here to help you. They can also help with updating your credit report as you get things paid and removed.
This Class was presented and taught by: Mandy Roderick Key Bank Mortgage 1115 Elkton Drive, Ste. 101 Colorado Springs,CO Direct phone 719-930-8226
Class offered to Tenant Buyers by: Lori Jake Swiftcurrent Investment Group, LLC EZQualDreamHomes.com
|
|
|
|
|
 |
 |
ezqualdreamhomes.com |
|
Privacy Policy
|